12/19/2023 0 Comments Did staples buy office depotStaples estimates that the merger will give it pro-forma annual sales of roughly $39 billion. Not only did Starboard get its wish, but the deal is expected to close by the end of this calendar year. “For a variety of reasons, we believe that now is the right time to pursue such a transaction, and we urge you to immediately retain a reputable investment bank and legal advisors to assist the Board in evaluating, structuring and executing a transaction with Office Depot,” the firm wrote in January. This was also four months before Staples’ activist investor, Starboard Value, would issue a letter to the Staples board urging an Office Depot acquisition. It was around this time that the FTC decided not to make Office Depot divest any stores in its merger with OfficeMax, a move that many analysts took as sign that a Staples-Office Depot merger could, at long last, go through. Staples, which first tried to merge with Office Depot in 1997 but was blocked by an antitrust regulator, said that it and Office Depot had been in acquisition talks since September 2014. All told, the transaction has a value of $6.3 billion. Based on Staples’ closing price on February 2, the deal values Office Depot at $11 per share, a 44% premium over the company’s closing price on February 2, the day before media speculation broke out and sent Office Depot stock for a nearly 22% surge. Staples said Wednesday that it reached a deal to acquire Office Depot’s outstanding shares for $7.25 in cash and 0.2188 of a Staples share. The two companies - whose shares surged in Tuesday trading on rumors of an imminent deal - confirmed Wednesday morning that Staples will acquire Office Depot in a deal worth more than $6 billion. Solomon Co is financial adviser to Office Depot, whose legal adviser is Simpson Thacher & Bartlett.Eighteen years after first attempting a merger, Staples SPLS -1.65% and Office Depot ODP NaN% are finally getting their wish: they are combining to form one giant office supply chain. Legal advisers are Wilmer Cutler Pickering Hale and Dorr LLP and Weil, Gotshal & Manges. It will also suspend its share buyback program.īarclays is financial adviser to Staples. Staples said it had secured a $3 billion credit facility and a $2.75 billion six-year term loan financing to fund the deal. Office Depot's stock closed at $9.49.īrian Yarbrough, an analyst at brokerage Edward Jones, said Staples was paying "a more than fair price" for Office Depot and was taking on a large debt to buy a competitor in a weak market. Staples will pay $7.25 per share in cash and 0.2188 of its shares for each Office Depot share, a premium of 44 percent to Office Depot's close on Monday before the Wall Street Journal reported that the companies were in talks.Īt $16.89, the low of Staples' share price on Wednesday morning, the deal values each Office Depot share at $10.94. Staples' shares fell 12 percent, suggesting investors were concerned about the deal. "There are some markets where it could be that the government could require some divestitures," said Jeffrey Jacobovitz of the law firm Arnall Golden Gregory LLP. Staples said it could call off the deal if authorities ordered divestitures that delivered more than $1.25 billion of Office Depot's 2014 U.S. Still, some asset sales could be required to gain approval. "Unless the FTC finds that prices have gone up as a result of that acquisition, the Staples transaction should have a good chance at clearance as well," Keeley said. The FTC's review of the new deal, which may take six months or more, will likely focus on whether prices have risen since Office Depot bought OfficeMax, said Michael Keeley, a partner at Washington, D.C. "The same factors that the FTC cited in the Office Depot OfficeMax deal are present here," Bloom said. The FTC required no asset sales in approving that deal. 3 OfficeMax in November 2013, and seemed to argue that it no longer made sense to have a separate market niche for office superstores, Bloom said. The FTC noted precisely these changes when it approved Office Depot's purchase of No. ![]() Since the failed deal, Amazon and other online sellers, which can deliver to almost anywhere, have exploded onto the scene, while megastores like Costco and Wal-Mart Stores Inc are also crowding the market. "I think there's a fair chance for this deal to be approved," said Seth Bloom, a veteran of the Justice Department's antitrust division who is now in private practice. But this time around the Federal Trade Commission, which is often skeptical of any bid by the top two firms in a sector to hook up, is likely to approve the deal, four antitrust experts said.
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